Challenging luxury market hits Burberry

A Burberry store in the Tsim Sha Tsui shopping district of Hong Kong
A Burberry store in the Tsim Sha Tsui shopping district of Hong Kong

​L​uxury fashion brand Burberry said sales were hit by a drop in tourist spending in Continental Europe and weak demand in Hong Kong​ ​and it expect​s​ the tough conditions to persist, ​hitti​ng profit​s​ this year.

The company​,​ famous for its ​Yorkshire-made ​trenchcoats​, reported revenue of ​£​1.41​bn for the six months to March ​31​, down ​one​ per​ ​cent on an underlying basis.
Burberry said adjusted profit before tax for the year to the end of March 2016 would be broadly in line with analysts' expectations, which range from £401m to £443m.
The group was not so optimistic for the current year, saying profit would come in towards the bottom of forecasts, which sits at about £405m.
Christopher Bailey, the Halifax-born chief creative and chief executive officer, said: ​“In an external environment that remains challenging for luxury, we continue to focus on reducing discretionary costs and are making good progress with developing enhanced future productivity and efficiency plans.
"Meanwhile, brand momentum is strong, digital continued to outperform in the half and innovation in new products is resonating well with our customers.”
Burberry is planning to open a new manufacturing and weaving facility for its heritage trench coat in the heart of Leeds.
The site, on the South Bank of Leeds, will employ more than 1,000 people when it is completed in 2019.
Burberry is spending an initial investment of £50m on the site.
The new facility will replace the two existing manufacturing and weaving centres in Castleford and Cross Hills, in West Yorkshire.
The plan is for all the teams from Castleford and Cross Hills to move to the new site, bringing all employees together under one roof. The company employs 700 staff in Castleford and around 70 in Cross Hills.